Integrative Case 1

-Merit Enterprise Corp.-

Statement of the Problem:

Which option is better between

the the first and the second
options?
CONS
1. This time the amount to be borrowed is much
bigger comparing to the seasonal credit lines and
medium term loans made before.
CONS
2. Covenant that banks impose on companies to
which they lent money.
CONS
3. The company will have to pay interest annually
plus the repayment of the principal.
PROS
1. Debts can often work as tax shields.
PROS
2. The company will not have to search in many
places to find investors.
CONS
1.The need for added disclosure for investors.
CONS
2. The company must also meet other rules and
regulations that are monitored by the Securities
and Exchange Commission (SEC).
CONS
3. The actions of the company's management also
become increasingly scrutinized as investors
constantly look for rising profits.
CONS
4.Major changes in company's culture
&governance
CONS
5. Management &AIS often must be upgraded
PROS
1.Shares have higher prices
PROS
2. Significant & immediate infusion of cash
PROS
3. An increased in public awareness of the
company
PROS
4.May lead to an increase in market share for the
company
PROS
5. Obtain money that does not have to be repaid
Conclusion